Indian health insurance market expands amid rising premiums

People without health insurance coverage ended up bearing large sums of out-of-pocket medical expenses during the pandemic. Since then, increased awareness of the importance of health insurance has resulted in a spurt in demand for health insurance policies, and increase in the sum assured. 

Though the pandemic appears to have ended, the demand for health insurance continues owing to factors such as long-term diseases, new ailments, and a higher rate of sudden sickness.

Rising costs

Since the onset of COVID, the costs related to healthcare services in India have skyrocketed — be it for medicines, consultations, lab tests, hospitalisation, or surgeries. Insurance companies have been pushed to increase premium amounts to combat these increased costs. 

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Speaking to The Federal, Yateesh Srivastava, an industry professional, said: “Increased policy premiums are a natural fallout of the substantial increase in costs associated with healthcare. In order to maintain the standard of services — including claim processing — the increase in the premium amount is warranted.”

Amid rising premiums, the health insurance industry has been growing at a rapid pace. The domestic health insurance market is estimated to reach $133.95 billion in 2023, and is expected to reach $216.96 billion by 2028, growing at a CAGR of 10.12 per cent.

Medical inflation

Even as people scramble to purchase health insurance, the government has been looking to address medical inflation. (The increase in the cost of healthcare services over time is known as ‘medical inflation’.) 

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The National Commission for Controlling Medical Inflation Act, 2022 was introduced in the Rajya Sabha in December 2022. This bill proposed to “regulate and standardise the rising costs of medicines, medical diagnostic tests, and pathological examinations.” The current medical inflation rate in India is 14 per cent.

This trend is not confined to India alone. Barring North America, it is prevalent in most countries across the globe. A report, titled WTW 2023 Global Medical Trends Survey says that “rampant inflation and increased healthcare utilisation coming out of the pandemic are contributing to the highest projected increase in global medical costs in nearly 15 years”.